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Is the thought of preparing a costs budget getting you down? Are you swamped with information about what you should or should not be doing but struggling to apply it in practice? Just what does that phrase ‘proportional costs’ mean? The recent judgment in Stella Willis v MRJ Rundell  EWHC 2923 (TCC) provides a welcome insight into how the courts might approach their review of costs budgets at the CMC.
Of relief to practitioners will be Coulson J’s attitude that whilst they should get to grips with the new costs provisions and ‘comply with the new regime as soon as possible’ such provisions are in their infancy and parties or their legal representatives should not be unduly penalised where costs budgeting is unfamiliar or counter intuitive. We will have to wait and see whether the Court of Appeal takes the same approach in the Mitchell appeal which is pending.
The judgment itself considers the issue of proportionality and looks at simple ways of looking at the costs budget both by itself and in the context of the proceedings to see whether the costs (both incurred and estimated) are proportional to the value of the issues in dispute. Clear guidance on contingent costs and the need to provide a breakdown of these rather than a lump sum is given as well as how parties should deal with incurred and estimated costs where they cover the same issue; it is important to ensure there is no double counting. All in all the message is clear, when drafting a costs budget make sure that the costs are broken down so that the other side and the court can see exactly why the costs are required. Providing a lump sum may have been the norm in some industry disputes prior to the Jackson reforms but that will no longer be acceptable. If in doubt break it down.
Ultimately Coulson J declined to make a costs order as he considered both parties costs to be unreasonable and disproportionate. Having already had one adjourned CMC he considered that it would not be costs effective to adjourn again with the sole purpose of trying to get the parties to deal with their costs budgets properly; they were simply told to keep them up to date and provide them to the court at the Pre-trial review. Whilst from a practical perspective one can see the logic of this how does it fit in with the role of the courts to costs manage as well as case manage proceedings since the introduction of the Jackson reforms? Does this approach give the green light to parties to simply set out what they want in the costs budget given that it appears that no sanction was applied by the court to the parties for failing to provide proportionate costs budgets?
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